The Fair Credit Reporting Act Is Tricky

You may recall that in October, I issued an update regarding the issuance of the new FCRA “Summary of Consumer Rights” form. Well, the FCRA continues to be a source of confusion and risk. The Act contains a series of steps that one must follow, and the failure to do any of them can create liability.

A federal Court recently held that an employer violated the Act when it failed to provide a copy of a consumer report to an applicant before it took an adverse action against her. In this particular case, the employer rejected three applicants who had prior drug-related convictions. Unfortunately, the employer failed to provide the applicants with copies of their consumer reports and notices of their rights under the Act before making this decision.

The applicants filed a class action suit against the company, arguing that it had violated the terms of the FCRA. The employer argued that its apparent violation was irrelevant because the consumer reports were accurate and the plaintiffs would not have been hired in any case.

The court rejected the employer’s argument and held that the law as clear: (1) that an employer must provide a consumer report and FCRA rights disclosure; and (2) that it must do so before it takes any adverse action. The accuracy of the report is not a defense to an employer’s failure to comply with the Act. A prospective employee has the right to receive their consumer report and a description of their rights under the FCRA before an employer takes any form of an adverse action against them on the basis of information discovered in the report—regardless of how accurate the background check may be.

Many employers make the mistake of revoking an offer or rejecting an applicant before they provide the applicant with a copy of the report and the rights disclosure, or they fail to give these documents to the applicant at all. And, most of the time nothing comes of these omissions. However, we need to be aware that doing so can create a viable claim for the applicant and that applicants are becoming more aware of their rights every day. The obvious best practice is to make sure that you know what the FCRA requires and that you create a system to ensure that you meet each of these requirements. Remember, the FCRA is tricky.

If You Have the Authority to Hire and Fire, the DOL Might Play the Grinch This Christmas and Sue You Personally for FLSA Violations

If my season-appropriate title did not make you at least a little uneasy, then you aren’t paying attention. I’ll say it again: If you have the authority to hire and fire employees, you may have personal liability under the Fair Labor Standards Act. That means that you may be sued personally in addition to your employer and that a plaintiff may seize your personal stuff (bank accounts, stocks, vehicles, gold bullion that all HR professionals are known to hoard…..).

Obviously, not all HR professionals may be sued individually, and the analysis as to whether or not they can is pretty fact specific. A recent (Nov. 11, 2018) case out of the U.S. District of Arizona offers a good outline of the analysis.

The U.S. Department of Labor sued Austin Electric Services and Mr. Toby Thomas. Mr. Thomas was the President of Austin Electric and an active manager of the company. He owned approximately 30% of its stock and as President, Mr. Thomas had the authority to hire and fire employees, although he had not done so in over eight years. Mr. Thomas also established the company benefit plan and determined if workers were initially classified as employees or independent contractors. Mr. Thomas also had the authority to set employee pay, although he had not recently done so. Most employee compensation was determined by an “informal committee.” Mr. Thomas was always a part of this informal committee and the other members indicated that his voice carried the most weight.

The FLSA provides that “’Employer’” includes any person acting directly or indirectly in the interest of an employer in relation to an employee. . .” This definition is given “an expansive interpretation in order to effectuate the FLSA’s broad remedial purposes.”

Whether or not an individual qualifies as an employer hinges generally on whether or not the individual “exercises control over the nature and structure of the employment relationship, or economic control over the relationship.” In doing so, Courts typically consider whether the alleged employer: (1) has the power to hire and fire employees; (2) determines the rate and method of payment; (3) supervises and controls employee work schedules or conditions of employment; and (4) maintains employment records.

Considering these factors, the District Court held that Mr. Thomas personally qualified as an “employer” for purposes of the FLSA. Significantly, the Court indicated that it was Mr. Thomas’s power to hire and fire that mattered, not whether or not he recently exercised that power. (This should encourage HR professionals to write their own job descriptions, making it clear that they do not have the power to independently hire and fire. Believe me, when it hits the fan, and people realize that they can be sued individually, they tend to “remember” that you had a lot more authority than you may have actually had. You will want something in writing to back up your assertion that you did not have sufficient authority to be an “employer.”)

The FLSA is one of the few federal employment-related statutes under which an HR professional can be sued personally. The OSHA Act also provides for individual liability to retaliation.

My suggestion, if your position lacks the final authority that could create personal liability under the FLSA, make that clear in own written job description. i.e. “Although this position may make recommendations, it does not have the authority to hire employees, fire employees, determine exempt v. non-exempt status, determine benefit eligibility…” You get the idea. On the other hand, if your position clearly does possess these powers, be sure to hide your hoard of gold in a very deep hole…

Shameless plug: If you need assistance in determining whether or not you may face individual liability under the FLSA or in crafting a written job description that will help you minimize this risk, don’t hesitate to contact me directly.

Tis The Season to Accommodate Your Employee’s Religious Beliefs

This time of year is significant to many religions, a great many of which do not celebrate the Christian tradition of Christmas. (This is not an invitation to discuss the Pagan origins of the Christmas tradition. My daughter, the missionary, has already given me an ear-full. Please allow me my fantasy that Baby Jesus had a beautiful spruce tree topped with a real angel at his birth.) A few of the more well-known religious holidays are listed below.

Bodhi Day  This Buddhist holiday, which commemorates the day that Siddhartha Guatama, the historical Buddha, experienced enlightenment, is traditionally celebrated on Dec. 8.

Christmas  This celebration of the birth of Jesus, the central figure of Christianity, takes place on Dec. 25. For Eastern Orthodox Christians, it takes place on Jan. 7.

Diwali  This five-day Hindu Festival of Lights begins Nov. 6 in 2018 and Oct. 27 in 2019.

Eid al-Fitr  This celebration that marks the end of Ramadan in the Muslim faith has shifting dates and can sometimes fall in December. (This currently falls at sundown on June 4, 2019.)

Hanukkah  In 2018, this eight-day Jewish Festival of Lights will start at sundown on Dec. 2 and end at sundown Dec. 10.

Kwanzaa  This weeklong secular holiday honoring African-American heritage is celebrated Dec. 26 – Jan. 1 each year.

Lunar New Year  This traditional Chinese holiday marking the end of winter falls on Feb. 5, 2019.

Yule  This Wiccan or pagan celebration of the winter solstice takes place every year between Dec. 20 and Dec. 23.

(Source: Tanenbaum Center for Interreligious Understanding)

Most employers are aware that Title VII both prohibits religious discrimination and requires that a covered employer must reasonably accommodate an employee’s sincerely held religious beliefs. This may include allowing an employee off of work. This does not mean however, that an employer must allow an employee off of work merely because they claim that “their religion” requires them to be off work. According to the EEOC, an employer need not provide the employee’s requested accommodation, in our case time off of work, if doing so would “impose more than a de minimis cost or burden on business operations”. As you can see, employers catch a break here. The de minimis standard is much more employer-friendly than the “undue burden” imposed by the ADA.

Don’t be too hasty to deny an employee’s request for accommodation because their “religion” sounds farfetched. (Anyone familiar with the Onion Heads?

According to the EEOC, in addition to the more main-stream religions, Title VII’s protections also apply to:

“…religious beliefs that are new, uncommon, not part of a formal church or sect, only subscribed to by a small number of people, or that seem illogical or unreasonable to others. An employee’s belief or practice can be ‘religious’ under Title VII even if the employee is affiliated with a religious group that does not espouse or recognize that individual’s belief or practice, or if few – or no – other people adhere to it. Title VII’s protections also extend to those who are discriminated against or need accommodation because they profess no religious beliefs.

Religious beliefs include theistic beliefs (i.e. those that include a belief in God) as well as non-theistic ‘moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views.’ Although courts generally resolve doubts about particular beliefs in favor of finding that they are religious, beliefs are not protected merely because they are strongly held. Rather, religion typically concerns ‘ultimate ideas’ about ‘life, purpose, and death.’ Social, political, or economic philosophies, as well as mere personal preferences, are not ‘religious’ beliefs protected by Title VII.

So, as we move through the holiday season, keep an open mind if your employees indicate that they need some sort of an accommodation for their religious beliefs. Typical accommodations recognized by the EEOC include flexible scheduling, voluntary shift substitutions or swaps, job reassignments, and modifications to workplace policies or practices. If you receive a request for accommodation, I would suggest that you go through an ADA-like analysis and, to beat the drum again, document the process that you used to consider the request.

Now if you will excuse me, as a recent convert to the “Church of Two Wheels”, I feel called to take off early and go for a ride…

Holiday Party Useful Tips to Consider

Some employers have moved away from holiday parties. However, many, including BS&W, continue to host holiday parties for employees, and some even continue to provide adult beverages at these parties. Below are some useful tips to consider if you do so.

Explain to management that they are “on duty”:

  • They must watch drinking and related behavior
  • Remember professional boundaries
  • No touching (preferably even when dancing)
  • Do not drive employees home after the party, regardless of how intoxicated they appear
  • Do not “after-party” with staff
  • “No” means no
  • Use the “mom test” (i.e. if you wouldn’t do/say it to your mom or in front of your mom, then don’t do/say it at the function.)

Remind employees that you want them to have fun, but:

  • Attendance is voluntary, but if they attend normal standards of conduct still apply
  • Misconduct at or after the party will lead to disciplinary action
  • Drink responsibly
  • “No” means no
  • No marijuana (even if they have a physician’s recommendation)
  • Encourage designated drivers or even provide free Uber or Lyft rides

For everyone:

  • Follow the “one wine, one water” rule (it is hard to get drunk if you drink a full glass or two of water between every alcoholic drink)
  • No dirty dancing
  • No sleep-overs after the party (or couch surfing)
  • And for goodness sake, please don’t hang mistletoe!

Be Very Careful What You Say to an Employee About FMLA Leave: You May Create a Claim That Otherwise Would Not Have Existed.

We all know that the in addition to requiring an employer to provide unpaid leave for up to twelve (12) workweeks and reinstatement upon return, the FMLA also prohibits an employer from interfering with an employee’s exercise of their rights under the FMLA. In order to be eligible for the protections of this Federal law, an employee must generally have worked for the employer for twelve months and 1,250 hours. However, employers can easily say or do things that can create an FMLA claim by employees who would ordinarily not be eligible for the protections of the Act.

By way of example; on January 25, 2017, Brillion Rest Home hired Angel Reif as an Administrator. In December of 2017, Ms. Reif informed her employer that her physician recommended that she have surgery to repair an old leg injury. Brillion’s HR Director informed Ms. Reif that although she would not be eligible for FMLA until January 25, 2018, it would be more convenient for Brillion if Ms. Reif would go ahead and have her surgery as soon as possible. The HR Director told Ms. Reif that “she should not worry about taking leave before January 25, I’m sure that it will be approved.”

In reliance upon the HR Director’s representations, Ms. Reif scheduled the surgery for January 10, 2018 and filled out the appropriate paperwork to secure time off for the procedure. Unfortunately, Brillion chose to deny Ms. Reif’s request for leave, indicating that she was not yet eligible to take FMLA leave. Ms. Reif had the surgery anyway and Brillion terminated her employment due to her absence from work.

As you might expect, Ms. Reif sued, arguing that Brillion interfered with her FMLA rights and discriminated against her because she took FMLA leave.

Brillion responded that Ms. Reif was not covered by the FMLA because she had not worked for Brillion for twelve months at the time that she took off, and thus, her claims should be dismissed.

The Court issued a common sense ruling denying Brillion’s Motion to Dismiss. In denying the Motion , the District Court judge noted that the employer “would be on solid ground as far as the FMLA is concerned if Reif had simply taken off for her surgery on her own prior to becoming eligible for FMLA leave.” But the judge noted that, according to the allegations, that is not what happened, and if Reif’s allegations turned out to be true, “It would be fundamentally unfair to allow an employer to force an employee to begin a non-emergency medical leave less than two weeks before she would become eligible under the FMLA, assure her that she would receive leave and her job would be waiting for her when she returned, and then fire her for taking an unauthorized leave.

While the FMLA provides us with very clear eligibility criteria (at least fifty employee, 75 mile radius, 12 months and 1,250 hours), these criteria can always modified by an employer in an employee’s favor. And, as the Brillion opinion shows, this modification need not be formal, universal or even intentional. An errant word or off-the-cuff remark from the wrong person can amount to a change in company policy upon which the employee may rely. In this case, the fact that the Brillion’s HR Director lead Ms. Reaf to believe that Brillion wanted her to take FMLA leave immediately, rather than waiting until she was “technically” qualified.

An even broader take away from this case is that it is very easy to get caught up in the legal minutia of employment related laws and regulations and to lose sight of the big picture. Will what we are doing strike the average person as egregiously unfair? If the answer is yes, judges and juries will quite often bend over backwards to find us liable, regardless of whether we are technically within our legal rights or not.

Ms. Reif’s case is still winding its way through the court system, and Brillion may eventually prevail. But if they do, it will be at significant expense. How much better off would Brillion be if their HR Director had not made an offhand statement that she could not back up, or if she had done what she said she was going to do and ensured that Ms. Reif was allowed FMLA leave despite the fact that she was a few weeks short of being technically eligible?

After a Nine Year Hiatus, the DOL Issues Two New FMLA Opinion Letters

The Department of Labor last issued an FMLA opinion letter in January of 2009, that is, until August 28, 2018, the day that the DOL issued two new Opinion letters dealing with the FMLA. As we have discussed in the past, when a regulatory agency issues an Opinion Letter or Guidance, it behooves us to take heed. They are the agencies’ way of telling us how they are going to construe the laws that they enforce. And, although such Letters and Guidance are not binging on civil courts, the courts often refer to them in their opinions.

FMLA20180-1-A – Organ Donor Leave:   In FMLA2018-1-A, the DOL stated that an otherwise healthy employee that chooses to donate an organ may be entitled to FMLA leave if the procedure and resulting recovery qualify as a  a Serious Health Condition. If the procedure and recovery do not meet the definition of a Serious Health Condition, the leave would probably not be covered by the FMLA. The fact that the procedure is voluntary is not relevant to the FMLA-qualification analysis.  As with most FMLA determinations, this requires a case-by-case analysis.

FMLA2018-2-A – Application of Disciplinary Point Systems to Employees on FMLA Leave:   In FMLA2018-2-A, the DOL addressed an employer’s no-fault attendance policy that suspends or “locks in” an employee’s disciplinary points while on FMLA leave. Under this policy, points rolled off every twelve months.  However, the employer locked in the points while its employees were out on any type of “protected” leave, such as FMLA, workers compensation, pregnancy, ADA…… The DOL stated that point reduction is a reward for working, and thus a benefit to which an employee on FMLA leave might not be entitled – as long as employees on other types of leave are treated the same.

This should give employers an additional tool to prevent employees who have almost accumulated a “terminal” number of points from taking FMLA leave in an attempt to allow some of their points to roll off whilst they are on leave. Keep in mind that the DOL’s blessing of this type of policy is based upon the fact that all types of protected leaves are treated similarly.

Don’t hesitate to contact me directly if you have questions concerning these or any other issues.

Does Your Last-Chance Agreement Contain A Prospective Waiver? It Probably Shouldn’t

As part of a progressive disciplinary process, we sometimes require employees to sign a document in which the employee acknowledges his past deficiencies and the fact that if his performance does not measurably improve, his employment will be terminated. (A “Last Chance Agreement”, because this is his last chance…..). There is nothing inherently illegal or wrong with an LCA, and they can be useful tools, both in an attempt to rehabilitate the employee and as proof that the employee was fully aware of the true reasons for his termination, if a termination occurs.

However, employers sometimes give in to the temptation to overreach in an LCA and include waivers of potential employment-related claims. That is precisely what got the Department of Veterans Affairs in hot water in Illinois a couple of months ago. The facts are as follows:

Mr. Lester, a sixty year old African American male worked for the Department of Veterans Affairs. Mr. Lester filed a race discrimination claim against the Department. As part of a mediated settlement, Mr. Lester was transferred to new location and required to sign an LCA. The LCA contained a provision that required Mr. Lester to waive all future claims that he may have against the Department. Shortly after his transfer the Department fired Mr. Lester. (Smells a little fishy?)

As one would expect, Mr. Lester sued the Department, claiming in part that the provision requiring the waiver of future claims constituted a materially adverse action that would dissuade a reasonable person from engaging in protected activity and, as such, constituted unlawful retaliation against Mr. Lester for filing a claim of discrimination against the Department. (The logic being-if a worker filed a claim of discrimination, the department would force you to either waive all future claims as part of the LCA or else be fired, thus reducing workers’ propensity to file complaints in the first place.)

The take-away from this case is:  We should be extremely cautious in presenting employees with waivers that require them to waive or release future claims or causes of action. When I say “extremely cautious,” I mean don’t do it. Waiving claims arising out of past conduct is probably OK, but waiving claims arising out of as-yet-to-occur, future conduct is probably not enforceable and may well give rise to a retaliation suit, as the Department of Veterans Affairs learned.